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43 Cards in this Set

  • Front
  • Back
What are pay Differentials?
used to compensate employees who work during times or locations that are less desirable
Goals of Total Compensation System (4)
-Attract ppl who can help org meet mission/vision,
-retain good performers,
-motivate and reward desired performers,
-spend comp dollars wisely
Internal Equity
perceived fairness of pay w/in org. based on obv of pay rates of coworkers and other jobs in org, emp determine whether pay system is fair. Empl can ensure intern equity by paying w/in set ranges and paying for KSAs/performance.
External Equity
considered when emp look at whether their total com equals what they could earn elsewhere. dissatisfaction usually occurs when they believe total comp is lower than most peers. Internet pay comparison sites they can easily access info. also look at factors like benefits, opp for advancement, and job security.
Pay Strategies: Lag Competition
-controls labor costs;
-may be used for economic necessity, may offset other higher costs
Pay Strategies: Match Competition
most common approach,
Lead Competition
strives to attract and retain best talent.
Pay increases: Merit
-used alone, or in combo w/step increases. Two notions: Emp advance basis of job perf. job perf dictates how far emp advance w/in pay range
Pay increases: Step
-pay ranges are divided into several, w/increases tied to length. -often used for nonexempt (gov uses it for both), -may incorporate perf where it impacts how many steps you increase
Differential: Premium pay
extra pay for working holidays or vacation days
Differential: Shift Pay
supp pay for less desirable hours
Differential: Emergency Pay
for work in response to emergency
Differential: On-call, or call-back pay
more money when they are available to come back in to work, on call.
Differential: Reporting pay
paid for reporting to work even if no work is available
Incentives: Short Term vs Long term
Short term: Easy to measure, but may not have lasting impact (ex monthly sale goals). Long term: Help retain high performers, therefore longterm pos results. NOTE: Incentive must be line of sight" must be able to influence attainment of goal and see results of their efforts. Should NEVER be used to keep salary costs down.
Incentive: piece-rate system (individual)
Most basic individual incentive system. allows workers who produce more to earn more. Ex Commission
Incentive: Gainsharing (group)
Group incentives used when difficult to measure individual performance or when perf requires cooperation of group. Gainsharing: Portion of the gains from the group is shared with group.
Incentive: Organizationwide
profit sharing/stock ownership are most common. bonus programs that are tied to company goals are another.
Compensation System Design (4) (JA,JD,JE,PS)
Job Analysis -> Job Documentation -> Job Evaluation -> Pay Structure
Job Analysis
a systematic method of collecting information about a job and evaluating the job requirements and the context in which performance occurs. It results in a written statement of the tasks performed in the job and the necessary qualifications of the job incipient--education level, exp, training, KSAs.
Job Documentation
Job Desc: -Help estab eval criteria -provide data for comparing pay to other orgs, -help assigning obj classifications or job titles. -comm expectations to supes/emps. -enhance org to defend discrimination
Job Evaluation.
assesses the worth of a position within the organization. helps define pay rate structure and setting pay rates that are comparable to other orgs.
Job specifications
written statements of minimum qualification, essential and nonessential job functions.
Job Evaluation: Nonquantitative Methods
eval whole job and attempt to place jobs in relative order: Job Ranking - simplest form. -Job Classification
Job Evaluation: Job Classifications
nonquant method - Descriptions are written for job classes, then jobs are put into area that best matches. Downsides: Subjective and jobs can fall into multiple sections. Also relies on job titles/duties, which can be dissimilar among orgs. Most commonly used by Government
Job Evaluation: Quantitative Methods
Use scaling system to show how much more valuable one job is. Use a variety of factors, referred to as compensable factors.
Job Evaluation: Compensable Factors
reflects the extent to which work adds value to org
Job Evaluation: point factor method
form of quantitative evaluation, most commonly used method of job eval. Most common factors used: Skills, respon, physical demands, working conditions, supe of others.
Job Evaluation: market based evaluation
org identifies the labor market to compete in and uses prevailing pay rates as relative worth of corresponding jobs. NOT true method of job eval, it still helps develop hierarchy.
Pay structures
Establish pay grades, setting pay ranges.
Pay grades (4)
-used to group together jobs that have about the same relative internal worth.
-# depends on size,
-distance btwn highest/lowest
-how precisely org defines/diff jobs
-pay increase/promotion policy.
Success means enough to distinguish jobs and not too much to blur between lines."
Setting pay ranges
Sets upper and lower limits of compensation for emp. Advisable to have overlap, so that exp per in lower job can make more than inexp in higher one.
Benefit Questions (6)
-What's required by law?
-What's will keep org competitive?
-What are cost effective?
-What are preferred?
-What are creative/out of the box benefits?
Benefit Trends (5)
0Healthcare cost containment
-Consumer directed health care plans (high deduct),
-work/life balance,
-preventive health/wellness,
-retaining younger workers (childcare/education reimb)
Legally Mandated Benefits (6)
-Social Security,
-Medicare (hosp ins-free, med ins-opt,prescript-paid),
-Unemployment ins,
-Worker's comp
-Fed/State leave (FMLA, Jury, Military)
-COBRA
COBRA
Requires emp to allow individ to continue coverage up to 18-36 mo. Length decided by type of qualifying event.
American Recovery and Reinvestment Act (ARRA)
Amendment to COBRA rules. provides subsidy of up to 65% to "assistance eligible individuals
Health-care benefits: Preferred Provider (PPO
-Blend of trad and health maintenance org
-Contracts with physicians who agree to certain fee schedules and plan requirements
-Emp who see plan doctors have no deduct or a lower copayment
Health-care benefits: Health Maintenance Plan (HMO)
-Restricts emp chocie of providers to a fixed panel of doctors or a fixed location
-fixed fee per patient or salary
-uses cost control mechanisms like incentive payments or using nurse practitioners to screen/eval patients and wellness programs
Health-care benefits: Indemnity or traditional plan
-Emp can see any doctor
-docs receive a fee
-more expensive than HMOs or PPOs
-offers few wellness services,
-caps coverage and limits reimbursement
-annual deductibles and copayments
Section 125
type of "cafeteria plan" where emp picks and choose specific benefits Ex: FSAs,
Disability Benefits
Sick Leave, Short-term Disability, Long-term disability
What's the difference between (retirement) of a Defined Benefit Plan vs a defined contribution plan?
-promises benefits upon retirement, vesting schedule, based on service/salary, empl bears investment risk. -contribution plan promises contributions will be credited to emp account (vesting), requires individual accounts, emp bears investment risk.